If somebody does not trade and just deposits, then wants his fund back in the same format he sent them, then there is no need for ID verification.
That is not correct. Once a customer sends funds there is a "business relationship".
If they let him have his funds back and then a month or year later IF there is a request by Italian authorities or an audit then they can justify their returning of the crypto by saying the CTO gave wrong information and the funds were sent by the customer in error.
I am sure the OP would be happy to withdraw his crypto over a period of 4 days to the value of 8,750 EURO a day over a 4 day period.
The stance taken by the exchange is dubious enough but the fact that they seem to revel in the suffering of the OP makes this a very sad matter indeed.